Meta's Q4 Strength Contrasts with DeepValue's Caution on EU and Capex Risks

What happened

A Seeking Alpha article from February 13, 2026, reiterates Meta as a strong buy, citing a 23.78% YoY Q4 revenue beat and $14 billion free cash flow despite a 49% CapEx increase. However, the latest DeepValue master report maintains a 'WAIT' rating, warning that at $649.81, the stock underweights near-term EU consent-model risks and legal binary outcomes. The report highlights Meta's aggressive 2026 guidance, with capex of $115-135 billion and total expenses of $162-169 billion, while Reality Labs losses remain a persistent drag. AI-driven ad improvements, such as a 3.5% lift in Facebook clicks, are real but face immediate tests from the EU's 'Less Personalized Ads' rollout in Q1 2026. Thus, the narrative centers on whether short-term ad momentum can offset looming regulatory and spending pressures over the next 3-6 months.

Implication

The bullish article glosses over critical filings-based risks, making immediate investment premature without proof points from Q1. Meta's elevated 2026 capex requires sustained ad growth, but EU consent changes could degrade auction pricing and advertiser ROI in Europe. Reality Labs continues to burn cash with similar losses expected, challenging capital allocation despite AI glasses' early promise. Legal exposures, including youth-related trials in 2026, add binary downside not priced in at a P/E of 27.1. Therefore, focus on monitoring Q1 revenue against the $53.5-56.5B guidance and early EU metrics before considering entry, aligning with DeepValue's 'WAIT' stance.

Thesis delta

The new article does not materially shift the investment thesis; it reinforces Meta's strong Q4 performance but ignores the near-term risks emphasized in filings. The delta is minimal: the core thesis remains that waiting for Q1-Q2 evidence on EU ad performance and capex execution is crucial, as valuation already reflects AI-ad strength without adequate discount for uncertainties. No change in the 'WAIT' recommendation is warranted until these operational proof points are clarified.